Elton Collins didn’t make many former coworkers at Community Bank and Trust happy on Feb. 1 when, in the wake of the FDIC’s takeover of the Cornelia-based bank, he made a prediction.
“There’s some people in our company going to jail,” the former Jackson County president of CBT said. “I know damn well they’re going to jail.”
The cover story of the Nov. 1 issue of Time Magazine — available on newsstands right now — appears to lend credibility to Collins’ allegation that fraud played a large role in the bank’s failure.
Time used the CBT failure to illustrate the nationwide issue facing the banking industry. The story, “The Anatomy of a Failure,” points out that a report by the FDIC’s inspector general found that “Some (Community Bank and Trust) bankers crossed the line from dangerously sloppy to potentially criminally fraudulent, lending to one another and favored friends and concealing lines of credit.”
The Time story alleged that former CBT chief lending officer R. Randy Jones got kickbacks from loans made to a Cornelia area developer and concrete salesman and in 2008 made $2.8 million in fraudulent loans to “straw” companies controlled “by a recovering drug addict.”
Time reported that Jones and his lawyer did not respond to requests for comments, but the article noted that his three co-conspirators pled guilty to criminal charges and could wind up in prison, and Jones is expected to plead guilty to one charge. In addition, charges against other employees remain a possibility.
The FDIC walked into Community Bank and Trust’s main office at 6:00 p.m. on Jan. 29, took over, and sold its $1.2 billion in assets to South Carolina Bank & Trust. While depositors lost no money, shareholders in the bank lost everything.
South Carolina Bank & Trust promptly let 120 employees go and foreclosed on 224 loans, the vast majority of them commercial, valued at $49 million. It continues to operate the bank as Community Bank & Trust.
The Time article mentioned no former or current bank officers or employers other than Jones. The failure of Community Bank and Trust, which has a number of Jackson County offices, is expected to cost the FDIC $336 million, according to Time.